Women’s entrepreneurship is thriving in America. According to the 2018 State of Women-Owned Business report commissioned by American Express, 1,821 women-owned businesses were launched per day over the last year, bringing the total number of women-owned firms to 12.3 million, employing over 9 million people and accounting for $1.8 trillion in revenue.
So, in these last few days of October, as we wind down the celebration of National Women’s Small Business Month, we are still reminded of the tremendous contributions women business owners have made to the global economy, but also charged with challenging the antiquated mindsets and inadequate policies that still plague our cause.
Surge in female-owned firms
Despite those challenges, the entrepreneurial spirit among women, especially women of color, is magical, sparking growth across all industries. Between 2007 and 2018, the number of businesses owned by women of color grew at 3x the national average of all women-owned firms, driven primarily by Hispanic and African-American women. As of 2018, women of color accounted for 47% of all women-owned businesses.
So, it’s not surprising that significantly more Hispanics and African-American women believe that owning a business is a strong indicator of success. According to the 2018 ThinkNow Entrepreneurship™ Report, 47% of Hispanic women and 52% of African-American women agree with this sentiment compared to White and Asian women.
While half of women-owned businesses are concentrated into three industries – other services, healthcare/social assistance, and professional/scientific/tech services – the restaurant/food and beverage industry are among the top choices for women to start businesses, according to ThinkNow.
Reasons for and Barriers to business ownership
So, why are women starting businesses? Or, why aren’t they? The State of Women-Owned Business Report suggests that the two main drivers of entrepreneurship over the past year was necessity and opportunity. Additional factors for women, as identified by ThinkNow, include personal growth, better work/life balance, and the opportunity to work from home. Greater independence also ranked highly among women at 44%, only a few points lower than their male counterparts at 48%.
Looking at the same data by ethnic groups, Hispanic, African American, and Asian women are driven to entrepreneurship primarily by a desire for personal growth and greater independence. Better work/life balance, while a factor, is not a top concern among minorities as it is for white women.
While the entrepreneurship landscape for women is promising, there are still many women who desire to start businesses but lack the financial means or know how to do so. Many are paralyzed by uncertainty, and understandably so. The reality is, many companies fail during the first five years of business, and 88% of women-owned firms generate less than $100,000 in revenue. There are other barriers. According to ThinkNow, Hispanic women are more likely to see the economy as a barrier to starting a business while White and African American women struggle more with the notion of uncertainty.
Awareness of small business resources
For entrepreneurs, uncertainty is a constant companion. But, raising the level of awareness of small business support services can help reduce this friction, and empower women with the confidence and tools needed to launch a business. Over 40% of women report having no knowledge of small business support organizations, compared to 31% of men, according to ThinkNow. The top three resources well known among women are the Small Business Administration (SBA), Women Business Centers, and SCORE. Moving from awareness to utilization, 78% of women use none of these services. This number is highest among Asian women.
Where do we go from here?
Raising awareness and increasing utilization of business support services, many of which are free or low cost, is essential to helping more women realize their dreams of entrepreneurship. But, it’s also as important that women in business agree to mentor and sponsor other women so that they see what success looks like from a peer level and hear first-hand accounts of both successes and failures, and next steps.
Download the 2018 ThinkNow Entrepreneurship™ Report here
Jacqueline Hayes, MBA is chief marketing strategist and principal of Crayons & Marketers, a full-service marketing company located in Nashville, Tennessee. She also serves as current communications chair and past president of the National Association of Women Business Owners, Nashville Chapter. Crayons & Marketers is a WBENC certified Women’s Business Enterprise (WBE), certified Minority Business Enterprise (MBE), and a certified Woman Owned Small Business (WOSB). For more information, please visit www.crayonsandmarketers.com